Wrapped Bitcoin: What It Is, How It Works, and Why It Matters in Crypto

When you hear Wrapped Bitcoin, a tokenized version of Bitcoin that runs on Ethereum and other blockchains. Also known as wBTC, it lets you use Bitcoin in DeFi apps without moving your actual BTC off the Bitcoin network. Think of it like a receipt for your Bitcoin—backed 1:1, redeemable anytime, but usable on networks that don’t natively support Bitcoin.

Wrapped Bitcoin isn’t magic. It’s a bridge. You send Bitcoin to a trusted custodian, they lock it up, and issue wBTC on Ethereum. That wBTC can then be used in lending, staking, or trading on decentralized exchanges—something native Bitcoin can’t do. This is why DeFi, a system of financial apps built on blockchains without banks relies so heavily on wBTC. Without it, Bitcoin’s $1 trillion market cap would be locked out of the $100+ billion DeFi economy. And it’s not just Ethereum. wBTC works on Polygon, Arbitrum, and even Solana through bridges. That’s why tokenized Bitcoin, any asset that represents Bitcoin on another blockchain has become one of the most trusted ways to bring Bitcoin’s value into new ecosystems.

But it’s not risk-free. The whole system depends on custodians—companies that hold the real Bitcoin. If they mess up, get hacked, or disappear, your wBTC could be worthless. That’s why most wBTC is backed by reputable groups like BitGo and overseen by a decentralized DAO. Still, you’re trusting humans and code, not just math. That’s why many traders use wBTC for short-term DeFi gains but keep their long-term Bitcoin on the original chain.

What you’ll find here are real breakdowns of how wBTC connects to other tokens, exchanges, and DeFi protocols. You’ll see how it’s used in lending platforms, why some projects build around it, and how it compares to other wrapped assets. No fluff. Just what works, what doesn’t, and why it matters right now.